Alphabet’s surprise move to split its shares 20-to-1 could pave the way for the tech giant to enter the Dow Jones Industrial Average.
Alphabet (ticker: GOOG, GOOGL) announced the split after the close of trading on Tuesday due to its fourth-quarter earnings that beat analysts’ estimates. Non-voting Alphabet (GOOG) shares rose 10.4%, or $285, to $3,043 in premarket trading on Wednesday. Alphabet earned $30.69 per share during this period against the FactSet consensus of $27.80.
Alphabet’s share price will drop to around $148 based on the current share price when the split goes into effect in July.
The 30-stock Dow Jones Industrial Average has old-fashioned price weighting, and Alphabet couldn’t enter the index without crushing it unless it split its stock.